Is cash becoming a thing of the past?
With the ability to pay by debit cards, credit cards and even mobile phones, a recent survey by Rasmussen Reports found that two in five adults have gone cashless for an entire week, according to a story by CNNMoney.
But the convenience of plastic can come with a price. A 2011 study found that people paying with cash think more about a purchase's costs, while those using credit dwell more on the benefits, and are primed to pay more, according to the story.
"You have to have the money in your hand when you're paying with cash, whereas with your card you can easily swipe it. It makes it easier to overspend or overdraft when paying with a credit or debit card," says Carrie Culbertson, a share draft and card service specialist at Dupaco Community Credit Union's JFK branch.
So, how do you know which payment method is best? Culbertson recommends taking it on a case-by-case basis:
- For smaller purchases, consider paying by cash. With fewer small transactions to record in your checkbook, it makes it easier to balance your account.
- For larger purchases, consider paying by credit or debit card. If you use a credit card, though, pay it off each month. "If there is a discrepancy in your purchase, there is more security with a card," Culbertson says. "You have records with your receipt, and it would post to your account and become part of your history."
- If you aren't in the habit of using cash, make it part of your routine to withdraw a designated amount once a week. Once the money has been spent, you're without cash until the following week. To determine how much cash is appropriate for your budget, check out Dupaco's budget calculators.
- If you have two people sharing an account, it might be easier for one person to pay primarily by cash while the other uses plastic. It can limit the number of unknown transactions for the person charged with balancing the books. "It depends on your budget and the person and who's balancing the accounts in your house," Culbertson says. "But it's something else to consider."
By Emily Kittle